Tuesday, May 5–Jim Wyckoff’s Morning Markets Report
Global stock markets were mostly higher in overnight trading. U.S. stock indexes are pointed toward higher openings when the New York day session begins. Traders and investors early Tuesday are focused on the positives regarding local economies beginning to open back up in some major countries in Europe and North America. However, rallies in equities in the near term are likely to be tempered by eroding U.S.-China trade relations. The Trump administration has called out China’s leadership for mishandling and even concealing the Covid-19 outbreak that started in Wuhan, China. Reports this week are saying the global perception of China is now at a 30-year low. Many market watchers are wondering how China will react as it gets pushed farther into a corner by the U.S. This matter has the potential to eventually make the U.S.-China trade dispute of the past couple years look minor, and could even launch the world’s two largest economies into a “cold war” that rivals the one waged between the U.S. and Soviet Union for over four decades.
In overnight news, the March Euro zone producer price index was reported down 1.5% from February and down 2.8%, year-on-year.
The German high court on Tuesday has challenged the European Central Bank’s bond-buying authority, saying the ECB exceeded its powers. This is big news, as Germany is the workhorse of the European Union collective economy. The Euro currency fell on the news, as it once again raises questions about the long-term sustainability of the European Union during this time of “de-globalization” leanings by some countries that include the U.S. and U.K. It could be that the hard-working Germans are finally getting fed up with other EU nations and their economic woes.
The important outside markets see Nymex crude oil prices sharply higher and trading around $22.50 a barrel in June futures. The U.S. dollar index is higher today after the greenback bulls faded last week.
U.S. economic reports out Tuesday include the weekly Goldman Sachs and Johnson Redbook retail sales reports, the international trade report, the U.S. services PMI, the ISM non-manufacturing report on business, and the IBD/TIPP economic optimism index.
–Jim
U.S. STOCK INDEXES
June S&P 500 e-mini futures: Prices are higher in early U.S. trading. Bulls have the near-term technical advantage amid a near-term uptrend on the daily chart. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is below the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral early today. Today, shorter-term technical resistance comes in at the overnight high of 2,875.00 and then at 2,900.00. Buy stops likely reside just above those levels. Downside support for active traders today is seen at the overnight low of 2,824.50 and then at 2,800.00. Wyckoff’s Intra-day Market Rating: 6.0
June Nasdaq index futures: Prices are higher in early U.S. trading. A price uptrend is in place on the daily chart. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is even with the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at the overnight high of 8,916.75 and then at 9,000.00. On the downside, short-term support is seen at the overnight low of 8,798.50 and then at 8,700.00. Wyckoff’s Intra-Day Market Rating: 6.0.
U.S. TREASURY BONDS AND NOTES FUTURES
June U.S. T-Bonds: Prices are lower in early U.S. trading. Bulls still have the firm overall technical advantage amid recent sideways trading. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is below the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at the overnight high of 180 27/32 and then at Monday’s high of 181 26/32. Shorter-term support lies at the overnight low of 179 21/32 and then at 179 even. Wyckoff’s Intra-Day Market Rating: 4.0
June U.S. T-Notes: Prices are lower in early U.S. trading. Bulls still have the solid overall near-term technical advantage. Shorter-term moving averages (4- 9- 18-day) are neutral early today. The 4-day moving average is even with the 9-day. The 9-day is above the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at the overnight high of 138.30.5 and then at Monday’s high of 139.07.5. Shorter-term technical support lies at the overnight low of 138.20.0 and then at last week’s low of 138.17.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
U.S. DOLLAR INDEX
The June U.S. dollar index is higher in early U.S. trading. Bulls have the overall near-term technical advantage. The shorter-term moving averages for the dollar index are neutral early today, as the 4-day is below the 9-day and 18-day. The 9-day is even with 18-day moving average. Short-term oscillators for the dollar index are neutral to bullish early today. The dollar index finds shorter-term technical resistance at the overnight high of 100.070 and then at 100.250. Shorter-term support is seen at the overnight low of 99.375 and then at Monday’s low of 99.090. Wyckoff’s Intra Day Market Rating: 6.0
NYMEX CRUDE OIL
June Nymex crude oil prices are sharply higher and hit a two-week high in early U.S. trading. It appears a market bottom is in place. The shorter-term moving averages are neutral early today as the 4-day is above the 9-day and 18-day. The 9-day is below the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are bullish early today. Look for buy stops to reside just above technical resistance at $23.00 and then at $24.00. Look for sell stops just below technical support at the overnight low of $21.14 and then at $20.00. Wyckoff’s Intra-Day Market Rating: 7.0
GRAINS
US grain futures are mixed to lower in early US pre-market trading. This week is seeing heightened worries about a U.S.-China trade war, or worse. Grain bears remain in firm technical control, suggesting still more downside in the grain futures prices in the near term, amid global demand worries.
IMPORTANT NOTE: I am not a futures broker and do not manage any trading accounts other than my own personal account. It is my goal to point out to you potential trading opportunities. However, it is up to you to: (1) decide when and if you want to initiate any traders and (2) determine the size of any trades you may initiate. Any trades I discuss are hypothetical in nature.
Here is what the Commodity Futures Trading Commission
(CFTC) has said about futures trading (and I agree 100%):
1. Trading commodity futures and options is not for everyone. IT IS A VOLATILE, COMPLEX AND RISKY BUSINESS.
Before you invest any money in futures or options contracts, you should consider your financial experience, goals and financial resources, and know how much you can afford to lose above and beyond your initial payment to a broker. You should understand commodity futures and options contracts and your obligations in entering into those contracts. You should understand your exposure to risk and other aspects of trading by thoroughly reviewing the risk disclosure documents your broker is required to give you.
Jim Wyckoff